In the face of the climate emergency and growing commitments toward global carbon neutrality, more and more companies are engaging in climate contribution initiatives through the Voluntary Carbon Market (VCM). In this context, not all carbon credits are created equal, and it becomes essential to understand how to compare them in order to make informed and responsible decisions.
What is a Carbon Credit?
The voluntary carbon market is based on specific methodologies tailored to each type of project, all governed by certification standards. Each project aims to reduce or sequester greenhouse gas (GHG) emissions. One carbon credit represents one metric ton of CO₂ (or equivalent) avoided or removed from the atmosphere. However, the quality, impact, and reliability of these credits can vary significantly. Therefore, being able to distinguish between different types of carbon credits is crucial.
Below are key elements to help you better understand the types of carbon credits available.
Carbon Avoidance vs. Sequestration: Two Distinct but Complementary Impacts
There are two main categories of carbon credits based on their climate action mechanism:
-
Avoidance credits:
These aim to prevent the emission of a ton of CO₂ that would have occurred without the project. Examples include: Protecting and conserving threatened forests, distributing improved cookstoves, and promoting renewable energy in developing countries.
-
Removal credits:
These remove CO₂ already present in the atmosphere, either through Nature-based solutions (e.g., reforestation, agroforestry) or more advanced technologies (e.g., direct air capture and storage).
Avoidance provides an immediate impact but may be less permanent, while removal offers more stable, long-term benefits, albeit with a slower effect. Some initiatives, such as regenerative agriculture, can combine both approaches.
Types of Carbon Projects: Nature-Based, Community-Based, or Technological
Beyond their climate impact, carbon credits are also classified based on the type of project that generates them:
-
These projects leverage natural ecosystems and carbon sinks to address climate challenges, often combining moderate human intervention with environmental benefits: Forest conservation and preservation (REDD+), Improved forest management, Afforestation, reforestation, and revegetation, Conservation of mangroves, wetlands, and seagrass meadows, Agroforestry, and regenerative agriculture.
They often provide multiple co-benefits, including biodiversity protection, water resource management, and support for local communities.
-
Community Projects
These projects aim to deliver strong social and environmental co-benefits to households or communities in specific regions, going beyond simple carbon impact. Examples include: Distribution of improved cookstoves, Access to clean water, Rural electrification, Energy efficiency, and fuel switching.
These projects combine a strong local dimension with measurable climate impact.
-
Technological and Hybrid Projects:
This broad category includes both cutting-edge technologies and circular economy approaches. These projects tackle various issues, such as: Circular practices implementation, Waste management and composting, Renewable energy deployment, Methanization and biochar production, Direct air capture and geological carbon storage.
While often more costly and complex, these projects offer scalable climate solutions, though some may face industrialization or deployment challenges.
Each project type comes with its own characteristics in terms of cost, permanence, risk, and co-benefits. The key is to adopt a balanced climate contribution strategy, building a diversified carbon credit portfolio with varying impacts—and above all, to ensure the quality of the selected credits.
What Makes a High-Quality Carbon Credit?
A high-quality carbon credit is one where a ton of CO₂ is genuinely avoided or sequestered, and which meets the following criteria:
-
Measurability : Emission reductions must be calculated using robust methodologies and conservative assumptions.
-
Verifiability : The impact must be real and validated by an independent third-party auditor.
-
Permanence : Climate benefits must last over time, without risk of the carbon being re-emitted.
-
Additionality : The project’s positive impact must not have occurred without carbon finance.
-
Traceability : Each credit must have a unique serial number registered in a public registry.
Some credits go beyond these minimum requirements by offering additional environmental or social co-benefits—such as biodiversity conservation, improved public health, increased local income—which often align with several United Nations Sustainable Development Goals (SDGs).
The highest-quality credits can receive the Core Carbon Principles (CCP) label, granted by the Integrity Council for the Voluntary Carbon Market (ICVCM), certifying that they meet the most rigorous international standards.
What carbon standards and labels should be used to purchase reliable carbon credits in 2025?
Certification standards play a critical role in differentiating carbon credits. Here are the main ones:
Gold Standard :
Created in 2003 by WWF and other NGOs, Gold Standard focuses on projects with strong social and environmental impact. It primarily covers: Nature-based projects (e.g., forest preservation, reforestation), Community-based initiatives (e.g., cookstoves, water access), Energy efficiency and renewable energy.
Gold Standard is known for its strict co-benefit requirements, offering highly traceable and transparent credits—often at a higher price point.
Verified Carbon Standard (VCS) :
Managed by Verra, VCS is the most widely used standard globally, covering nearly all project types. Costs vary greatly depending on the project. Although some methodologies have faced controversy, it remains a market benchmark. To enhance social and environmental dimensions, Verra offers:
- SD VISta (Sustainable Development Verified Impact Standard): certifies co-benefits beyond carbon.
- CCB Standards (Climate, Community & Biodiversity): often used in forest projects to ensure balanced consideration of climate, communities, and biodiversity.
These additional labels and tags help buyers align their purchases with specific priorities: biodiversity, social impact, technological innovation, etc.
Other standards include: Plan Vivo: focused on small-scale, community-led projects, especially in agroforestry, ACR, and CAR: North American standards targeting specific regions or project types.
Puro, Isometric, and Rainbow: focused on technological and circular economy projects.
What is the price of carbon credits in 2025?
In the VCM, the price of a carbon credit is influenced by: Market supply and demand, Project type and implementation costs, Project location (labor, infrastructure), Certification standard, Presence of co-benefits, which can lead to premium pricing.
Between 2020 and 2024, prices fluctuated: rising steadily until 2022, then declining due to concerns about credit quality and transparency. Forecasts for 2025 anticipate a price rebound, particularly for premium-quality credits.
Which carbon credits to buy? Comparative analysis of options
Comparing carbon credits makes it possible to distinguish their impact, nature, and cost. Avoidance credits reduce emissions quickly but with sometimes less durable effects, while sequestration credits provide more stable yet progressive action.
Nature-based projects generally generate large volumes of credits with numerous co-benefits, but they carry a high risk of non-permanence. In the ClimateSeed portfolio, their prices range from €4 to €100 for avoidance and from €15 to €100 for removal.
Households and Community-based credits, also issued in large volumes and rich in social and biodiversity co-benefits, are often ex-post and affordable, with low prices ranging from €5 to €15.
Technological projects such as renewable energy require high upfront investment but low maintenance costs; they deliver reliable credits with low non-permanence risk and are among the cheapest on the market (€2 to €10).
In contrast, hybrid or engineered removal projects generate smaller volumes of credits with fewer co-benefits but high permanence. Their prices, however, are significantly higher: from €100 to €600 for hybrids and from €100 to over €1,000 for engineered projects.
Why diversify your carbon credits with a portfolio approach?
To summarize, the carbon credits available on the market are highly diversified. To maximize your climate impact while limiting risks, a portfolio approach is recommended.
The ideal approach is to ensure the quality of the credits selected, often through leading market players, to diversify the types of projects for a balanced impact, and to seek expert guidance in building a coherent, credible, and meaningful carbon contribution strategy.
At ClimateSeed, we support our clients in creating a portfolio of carbon projects tailored to their needs and challenges.
Please feel free to contact us to learn more about our approach.
Sources:
%201.png)
